What Is An Impound Account
While you are trying to sell your home, you will notice that prospective homeowners are going through complex procedures that will enable them to purchase a home. More than likely you have gone through the same types of processes when you first bought your home and therefore you will understand the difficulty and stress involved in attempting to receive a loan from a lender to help purchase a home.
Requirements
There are a number of requirements that lenders insist on borrowers who require a loan to purchase a home. One possible requirement is that the borrower set up an impound account. An impound account is basically a trust account that is established by the lender and is set up by the bank to manage payments involved in purchasing a home. Usually, the impound account is designed to manage payments for homeowner's hazard insurance, mortgage obligations, and property taxes. The reason that an impound account is often required by a lender to manage these payments is because these payments are received each month.
Impound Account
An impound account is run by the bank, in which a portion of the money invested in the impound account, is forwarded by the bank for scheduled payments on property taxes, hazard insurance, and mortgage payments. This monthly payment is usually 1/12th of the estimated amount of the annualized payment.
It is important to note that impound accounts are usually not required in receiving a standard loan for homebuyers. However, lenders usually require that the homebuyer set up an impound account in circumstances where a homebuyer is applying for a FHA loan, which is a loan that is insured by the Federal Housing Administration. Additionally, lenders often require that homebuyers set up an impound account in circumstances where a homebuyer is applying for a VA loan, which is a loan guaranteed by the U.S. Department of Veteran Affairs.
